Warren Buffett, Berkshire Hathaway CEO and chairman. Cnbc | Nbcuniversal | Getty Images
In 2007, Warren Buffett made a $1 million bet that he could outperform hedge fund managers over the course of a decade by investing in an S&P 500 index fund. In 2017, he won. Some individual investors are making similar bets on the S&P 500 with their money, whether it be through exchange-traded funds or mutual funds. True to its name, the S&P 500 index includes 500 large U.S. companies. The index is market cap-weighted, with each listed company’s weighting based on the total value of all its outstanding shares. The index is rebalanced quarterly.
The three biggest ETFs track the S&P 500 index, according to Morningstar. They are the SPDR S&P 500 ETF Trust , which trades under the ticker SPY; iShares Core S&P 500 ETF , with ticker IVV; and Vanguard S&P 500 ETF , which trades as VOO. Together, those funds make up almost 17% of the U.S. ETF market, according to Morningstar. In 2024, VOO has been the leader of those three funds in attracting new money, with $71 billion in net inflows over the first nine months, according to Morningstar, beating the record SPY set in 2023 by $20 billion.
Future index performance could be ‘muted’
The S&P 500 index has continued to make headlines for new all-time highs in 2024. Year to date, the index is up around 20% as of Oct. 8. Over the past 12 months, it has climbed 33%. That performance has bested some experts’ predictions for the index heading into this year, owing in part to a stronger U.S. economy than had been anticipated.
Warren Buffett’s S&P 500 bet paid off. Some experts say it may be time to diversify
